A dynamic international ETF actively managed by
RiverFront Investment Group LLC
First Trust Advisors L.P. (“First Trust”) announced today that
they have launched a new exchange-traded fund (“ETF”), the First
Trust RiverFront Dynamic Emerging Markets ETF (Nasdaq: RFEM) (the
“fund”). The fund seeks to provide capital appreciation through
exposure to emerging market economies and the opportunities they
represent. The ETF is actively managed by RiverFront Investment
Group, LLC (“RiverFront”) using their proprietary methodology,
which employs a quantitative and qualitative ranking system based
on factors that include value, quality and momentum. This is
combined with RiverFront’s optimization process and detailed
analysis. Currency hedging and risk management are also integral
parts of the active management of this ETF.
Michael Jones, Chairman and Chief Investment Officer of
RiverFront and a member of the fund’s portfolio management team
noted, “We believe that active management is essential in today’s
fast-moving markets, and this ETF offers active management of the
underlying equity portfolio and a dynamic approach to currency
hedging.”
Chris Konstantinos, RiverFront’s Director of International
Portfolio Management and also a member of the fund’s portfolio
management team added, “We believe that emerging markets currently
offer compelling equity valuations. As commodity prices stabilize
and China continues its economic transition, the emerging countries
that can successfully navigate this environment have meaningful
upside potential in the coming years. We believe the wide
divergence in political and economic environments across the
emerging markets makes a discipline of active management around
these opportunities and risks quite compelling.”
RFEM is one of four First Trust ETFs sub-advised by RiverFront
including the First Trust RiverFront Dynamic Europe ETF (Nasdaq:
RFEU), the First Trust RiverFront Dynamic Asia Pacific ETF (Nasdaq:
RFAP), and the First Trust RiverFront Dynamic Developed
International ETF (Nasdaq: RFDI). “We believe financial advisors
are seeking actively managed ETF portfolios that make greater use
of the inherent tax advantages of the ETF structure and
traditionally lower cost relative to actively managed mutual
funds,” said Mr. Jones. “RiverFront is especially proud to be
collaborating with First Trust on these innovative investment
solutions.”
“Emerging market equities are dynamic and quickly-evolving,
brimming with both opportunities and risks. We believe this
actively managed ETF may provide significant advantages versus ETFs
tracking traditional beta benchmarks, particularly when it comes to
security selection, asset allocation, and managing currency risk,”
said Ryan Issakainen, CFA, Senior Vice President, ETF Strategist at
First Trust.
The fund’s portfolio managers include Chris Konstantinos, CFA;
Michael Jones, CFA; Adam Grossman, CFA; Kevin Nicholson, CFA; Sam
Turner, CMT; Doug Sandler, CFA; and Scott Hays, of RiverFront who
share responsibilities for the day-to-day management of the fund’s
investment portfolio.
For more information about First Trust, please contact Ryan
Issakainen of First Trust at (630) 765-8689 or
RIssakainen@FTAdvisors.com.
About First Trust
First Trust Advisors L.P., along with its affiliate First Trust
Portfolios L.P., are privately held companies which provide a
variety of investment services, including asset management and
financial advisory services, with collective assets under
management or supervision of approximately $97 billion as of May
31, 2016 through unit investment trusts, exchange-traded funds,
closed-end funds, mutual funds and separate managed accounts. First
Trust is based in Wheaton, Illinois. For more information, visit
http://www.ftportfolios.com.
About RiverFront
RiverFront Investment Group LLC is a global asset manager
utilizing a strategic and tactical investment approach with
uncommon transparency. They are a registered investment advisor
whose employees maintain majority ownership. The team averages 20
years in the investment industry with an emphasis on relationships
with retail clients and advisors. RiverFront seeks to lift the
burdens of the financial markets from the shoulders of these
partners. For more information, visit
https://www.riverfrontig.com/.
You should consider each fund’s investment objectives, risks,
and charges and expenses carefully before investing. Contact First
Trust Portfolios L.P. at 1-800-621-1675 or visit
www.ftportfolios.com to obtain a prospectus or summary
prospectus which contains this and other information about the
funds. The prospectus or summary prospectus should be read
carefully before investing.
ETF Characteristics
The funds list and principally trade their shares on The Nasdaq
Stock Market LLC.
Investors buying or selling fund shares on the secondary market
may incur customary brokerage commissions. Market prices may differ
to some degree from the net asset value of the shares. Investors
who sell Fund shares may receive less than the share’s net asset
value. Shares may be sold throughout the day on the exchange
through any brokerage account. However, unlike mutual funds, shares
may only be redeemed directly from a Fund by authorized
participants, in very large creation/redemption units.
Risks
A fund’s shares will change in value, and you could lose money
by investing in a fund. One of the principal risks of investing in
a fund is market risk. Market risk is the risk that a particular
stock owned by a fund, fund shares or stocks in general may fall in
value. There can be no assurance that a fund’s investment objective
will be achieved.
A fund may invest in securities issued by companies concentrated
in a particular industry or country. A fund may invest in small
capitalization and mid capitalization companies. Such companies may
experience greater price volatility than larger, more established
companies.
An investment in a fund containing securities of non-U.S.
issuers is subject to additional risks, including currency
fluctuations, political risks, withholding, the lack of adequate
financial information, and exchange control restrictions impacting
non-U.S. issuers. These risks may be heightened for securities of
companies located in, or with significant operations in, emerging
market countries. A fund may invest in depositary receipts which
may be less liquid than the underlying shares in their primary
trading market.
A fund is more susceptible to the economic, market, regulatory,
political, natural disasters and local risks of the Asia Pacific
region than a fund that is more geographically diversified. The
region has historically been highly dependent on global trade, with
nations taking strong roles in both the importing and exporting of
goods; such a relationship creates a risk with this dependency on
global growth. Varying levels of accounting and disclosure
standards, restrictions on foreign ownership, minority ownership
rights, and corporate governance standards are also common for the
region.
A significant number of countries in Europe are member states in
the European Union, and the member states no longer control their
own monetary policies. In these member states, the authority to
direct monetary policies, including money supply and official
interest rates for the Euro, is exercised by the European Central
Bank. Furthermore, the European sovereign debt crisis has had, and
continues to have, a significant negative impact on the economies
of certain European countries and their future economic
outlooks.
Investments in securities and instruments traded in developing
or emerging markets or that provide exposure to such securities or
markets can involve additional risks relating to political,
economic or regulatory conditions not associated with investments
in U.S. securities and instruments or investments in more developed
international markets.
A fund may hold investments that are denominated in non-U.S.
currencies, or in securities that provide exposure to such
currencies, currency exchange rates or interest rates denominated
in such currencies. Changes in currency exchange rates and the
relative value of non-U.S. currencies may affect the value of a
fund’s investments and the value of a fund’s shares. Commodity
futures contracts traded on non-U.S. exchanges or with non-U.S.
counterparties present risks because they may not be subject to the
same degree of regulation as their U.S. counterparts.
If a counterparty defaults on its payment obligations, a fund
will lose money and the value of fund shares may decrease. A fund’s
investment in repurchase agreements may be subject to market and
credit risk with respect to the collateral securing the
agreements.
Certain securities held by the funds are subject to credit risk,
interest rate risk and income risk. Credit risk is the risk that an
issuer of a security will be unable or unwilling to make dividend,
interest and/or principal payments when due and that the value of a
security may decline as a result. Interest rate risk is the risk
that the value of fixed-income securities in the fund will decline
because of rising market interest rates. Income risk is the risk
that income from the fund's portfolio could decline if interest
rates fall.
Preferred securities combine some of the characteristics of both
common stocks and bonds. Preferred securities are typically
subordinated to bonds and other debt instruments in a company's
capital structure, in terms of priority to corporate income, and
therefore will be subject to greater credit risk than those debt
instruments.
Real estate investment trusts (REITs) are subject to certain
risks, including changes in the real estate market, vacancy rates
and competition, volatile interest rates and economic
recession.
The use of derivatives can lead to losses because of adverse
movements in the price or value of the underlying asset, index or
rate, which may be magnified by certain features of the
derivatives. These risks are heightened when a fund’s portfolio
managers use derivatives to enhance a fund’s returns or as a
substitute for a position or security, rather than solely to hedge
(or offset) the risk of a position or security held by a fund.
Because of a fund’s utilization of the dynamic currency hedging
strategy, a fund may have lower returns than an equivalent
non-currency hedged investment when the component currencies are
rising relative to the U.S. dollar. Although a fund seeks to
minimize the impact of currency fluctuations on returns, the use of
currency hedging will not necessarily eliminate exposure to all
currency fluctuations.
Forward foreign currency exchange contracts involve certain
risks, including the risk of failure of the counterparty to perform
its obligations under the contract and the risk that the use of
forward contracts may not serve as a complete hedge because of an
imperfect correlation between movements in the prices of the
contracts and the prices of the currencies hedged. Hedging against
a decline in the value of a currency does not eliminate
fluctuations in the value of a portfolio security traded in that
currency or prevent a loss if the value of the security
declines.
Growth stocks tend to be more volatile than certain other types
of stocks and their prices usually fluctuate more dramatically than
the overall stock market. A stock with growth characteristics can
have sharp price declines due to decreases in current or expected
earnings.
A fund may employ in part a “momentum” or “value” style
methodology that emphasizes selecting securities that have had
higher recent price performance compared to other securities or
that the sub-advisor considers to be undervalued or inexpensive,
respectively. Momentum can turn quickly and cause significant
variation from other types of investments. And disciplined
adherence to a “value” investment mandate can result in significant
underperformance relative to overall market indices and other
managed investment vehicles that pursue growth or flexible style
mandates.
Illiquid securities involve the risk that the securities will
not be able to be sold at the time desired by a fund or at prices
approximately the value at which a fund is carrying the securities
on its books.
The funds may invest in Business Development Companies (BDCs)
which may carry risks similar to those of a private equity or
venture capital fund. BDCs are not redeemable at the option of the
shareholder and they may trade in the market at a discount to their
net asset value. The BDCs held by the funds may employ the use of
leverage through borrowings or the issuance of preferred stock.
While leverage often serves to increase the yield of a BDC, this
leverage also subjects a BDC to increased risks, including the
likelihood of increased volatility and the possibility that a BDC's
common share income will fall if the dividend rate of the preferred
shares or the interest rate on any borrowings rises.
The funds currently intend to effect a portion of creations and
redemptions for cash, rather than in-kind securities. As a result,
the funds may be less tax-efficient.
A fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher
portfolio turnover rate may indicate higher transaction costs and
may result in higher taxes when fund shares are held in a taxable
account.
The funds currently have fewer assets than larger funds, and
like other relatively new funds, large inflows and outflows may
impact the funds’ market exposure for limited periods of time.
The funds are classified as "non-diversified" and may invest a
relatively high percentage of their assets in a limited number of
issuers. As a result, the funds may be more susceptible to a single
adverse economic or regulatory occurrence affecting one or more of
these issuers, experience increased volatility and be highly
concentrated in certain issuers.
Actively managed funds are subject to management risk. In
managing a fund’s investment portfolio, the sub-advisor will apply
investment techniques and risk analyses that may not have the
desired result.
First Trust Advisors L.P. is the adviser to the funds. First
Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P.,
the funds’ distributor.
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version on businesswire.com: http://www.businesswire.com/news/home/20160615005829/en/
First TrustRyan Issakainen(630)
765-8689RIssakainen@FTAdvisors.com
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